UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
Date of report (Date of earliest event reported) January 17, 2018
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PHOTRONICS, INC.
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(Exact name of registrant as specified in its charter)
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Connecticut
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0-15451
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06-0854886
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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15 Secor Road, Brookfield, CT
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06804
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's Telephone Number, including area code
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(203) 775-9000
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD
On January 17, 2018, Photronics, Inc. (the “Company”) will present at the 20th Annual Needham Growth Conference. The presentation to be used during the event is attached as Exhibit 99.1 to this Form 8-K. The presentation will also be available via webcast. Interested parties may register for the webcast through the Investors section of the Company’s website at www.photronics.com.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
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Exhibits
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| 99.1 |
Presentation January 17, 2018.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PHOTRONICS, INC.
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(Registrant)
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DATE: January 17, 2018
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BY
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/s/ Richelle E. Burr
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Richelle E. Burr
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Vice President, General Counsel
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PHOTRONICS, INC.
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EXHIBIT INDEX
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Exhibit
Number
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Description
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Presentation January 17, 2018.
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Exhibit 99.1
Photronics, Inc.Merchant Photomask Leader 20th Annual Needham Growth ConferenceJanuary 17, 2018
Safe Harbor Statement This presentation and some of our comments may contain projections or other forward-looking statements regarding future events, our future financial performance, and/or the future performance of the industry. These statements are predictions, and contain risks and uncertainties. Actual events or results may differ materially from those presented. These statements include words like “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “may”, “should” or the negative thereto. We cannot guarantee the accuracy of any forecasts or estimates, and we are not obligated to update any forward-looking statements if our expectations change. If you would like more information on the risks involved in forward-looking statements, please see the documents we file from time to time with the Securities and Exchange Commission, specifically our most recent Form 10K and Form 10Q.Non-GAAP Financial MeasuresThis presentation and some of our comments may reference non-GAAP financial measures. These non-GAAP financial measures exclude certain income or expense items, and are consistent with another way management internally analyzes our results of operations. Non-GAAP information should be considered to be a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Please see the “Reconciliation of GAAP to Non-GAAP Financial Information” in this presentation. 2
Global merchant photomask market and technology leader#1 merchant market share positionDelivering high-end growth through technology leadershipInvestment strategy aligned with secular growth trendsChina industry expansionTechnology inflection from LCD to AMOLEDExpect +40% organic revenue growth over next 3 yearsStrategic investments bring top-line growthOperating leverage creates margin expansion A Compelling Investment Thesis 3
BackgroundGrowth DriversFinancial Summary Agenda 4
BackgroundGrowth DriversFinancial Summary Agenda 5
Largest merchant photomask manufacturerExpanding global footprint to supply increasingly global customer baseInvesting to extend high end leadershipStrong and flexible balance sheet to fund growth Photronics at a Glance 6 Key StatsMarket Symbol: PLABStock Exchange: NASDAQHeadquarters: Brookfield, CTFounded: 1969Employees: 1,475
All Electronic Devices Need Photomasks 7 Design End User Photomask Manufacturing Process SmartphoneTabletPCVirtual Reality Automotive TVIoTIndustrialAppliance Transports component design to manufacturing process Device manufacturing and end product assembly Component Design Unique, proprietary IC & FPD circuit design
BackgroundGrowth DriversFinancial Summary Agenda 8
Extending Leadership ThroughHigh-End Investments 9 High-End30% Mainstream70% High-End68% Mainstream32% Growth Investment Cycle
Mobile devices moving from LCD to AMOLEDSuperior visual characteristicsLower power consumptionEnables flexible formatIncreases mask complexityMore mask layers per setTighter specs on each layerInstalling P-800 in H1181st to install this advanced mask writerProduces highest resolution AMOLED masks Leveraging Technology Leadership for Mobile Display AMOLED Adoption 10 Source: Internal Estimates iPhone X not the end of the story
G10.5+ Delivers Greater Glass Efficiency 11 65” 65” 75” 75” 65” 65” 65” 75” 75” 75” 75” 75” 75” 65” 65” 65” 65” 65” 65” 65” 65” 3370 mm x 2940 mm 2200 mm x 2500 mm 1950 mm x 2250 mm 1500 mm x 1850 mm 73% 88% 64% 94% 95%
China represents fastest growing display region~40 fabs in production, under construction or being plannedExpected to be largest display producer within next few yearsPhotomask opportunities in China are attractiveWide range of technology, including AMOLED & G10.5+No strong merchant producer “Made in China 2025” Driving Growth in FPD Market… 12 +17% CAGR Source: Internal Estimates G10.5+ CAGR +62%
China represents fastest growing semiconductor regionAccommodative government policy (Made in China 2025)Growing domestic producersInvestments by multi-nationalsPhotomask opportunities in China are attractiveWide range of nodes in logic and memoryNo strong domestic merchant mask producer …and IC Market 13 18% CAGR Source: IC Insights, May 2017
We already have meaningful business in ChinaStrong 5-year growth (IC +28% CAGR; FPD +73% CAGR)10% of 2017 revenue (8% of IC; 19% of FPD)Manufacturing presence in China should accelerate growthCustomer contracts will help quickly ramp facilitiesInvestment incentives reduce risk and improve returnsIC JV enables us to compete more effectively Successfully Developing China Business 14 +39% CAGR
IC FPD Announced August 2016 August 2017 Location Xiamen Hefei Investment ($M) $160M $160M Structure Majority-owned JV Wholly-owned Investment time period 5 years 5 years Technology High-end, mainstream, logic, memory Up to G10.5+, AMOLED Production start Early 2019 Spring 2019 Projected sales $150M (total for both operations) Investing in China Operations 15 PLAB well positioned for these investmentsGlobal merchant market and technology leaderStrong footprint in AsiaBalance sheet to support investment
Expanding Global Network to Serve Global Customers 16 ICFPD China plants under construction; plan to begin production in 2019
BackgroundGrowth DriversFinancial Summary Agenda 17
Q4 best quarter of yearImproving customer demand trendsSequential growth in all high-end sectorsHigh-End IC +49%High-End FPD +2%Strong operating cash flow each quarterAnticipate trends to continue in 2018 Finished 2017 with Momentum 18
Tremendous operating leverage: 50% targetPositive Free Cash Flow since 2009Strong balance sheetSignificant net cash positionFinancial flexibility enables growth investments Solid Financial Fundamentals 19
Generating Cash to Fund Investments 20 2018 capex:China IC & FPD expansionFPD P-800 mask writer~50% planned for Q418
Strong and Flexible Balance Sheet 21 Clear capital deployment prioritiesFund organic growthExplore strategic M&AReduce debt (converts become due in 2019)Anticipate minimum $75M net cash throughout China investment periodExcellent liquidity positionOperating cash generatorMay use credit facilities to borrow locally in China *Net cash defined as cash and cash equivalents less long-term borrowings (including current portion)
Global merchant photomask market and technology leader#1 merchant market share positionDelivering high-end growth through technology leadershipInvestment strategy aligned with secular growth trendsChina industry expansionTechnology inflection from LCD to AMOLEDExpect +40% organic revenue growth over next 3 yearsStrategic investments bring top-line growthOperating leverage creates margin expansion A Compelling Investment Thesis 22
Thank you for your interest! For Additional Information:R. Troy Dewar, CFADirector, Investor Relations203.740.5610tdewar@photronics.com
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